ACS gets German approval for Hochtief bid

By Josie Cox

FRANKFURT (BestGrowthStock) – Shares in Hochtief (HOTG.DE: ), Germany’s largest construction group, rose on Tuesday after German markets regulator BaFin gave the go-ahead for Spanish group ACS’s (ACS.MC: ) hostile takeover offer.

By 1321 GMT the shares were up nearly 3 percent at 57.45 euros, while Frankfurt’s mid-cap index (.MDAXI: ) was 0.2 percent higher, BaFin having approved the Spanish firm’s bid late on Monday.

The low-ball offer, worth just over 54 euros ($71) a share on Tuesday, is designed to be rejected to leave the Spanish firm free to increase its 29.9 percent holding above the 30 percent threshold that triggers a mandatory bid under German takeover rules without having to buy the entire company.

ACS, attracted to Hochtief by its low borrowings and lucrative 54.5 percent-owned Australian unit Leighton (LEI.AX: ), has already said it plans to gradually accumulate a controlling stake of 51 percent.

Analysts say that gaining a majority of Hochtief would allow ACS, being advised by Lazard (LAZ.N: ), to consolidate its accounts and cut its leverage.

Net debt at ACS stood at 9.08 billion euros at the end of September whereas Hochtief told investors in a results presentation its was 447 million euros.

Analysts had been divided in predicting whether the tactical offer would be approved by BaFin but Hochtief’s share price fell almost 6 percent on Monday as traders bet on BaFin blocking it.

“Yesterday, Hochtief’s share (price) was hit by a weak market and speculation that BaFin would reject the bid, so we expect the stock to outperform today,” traders at the Frankfurt-based Alpha brokerage said.

German magazine Der Spiegel had said on Saturday that the regulator was likely to block ACS’s offer of eight ACS shares for every five Hochtief shares, which was worth 54.4 euros a share or 3.8 billion euros on Tuesday.

BaFin could have blocked the bid if it had not been convinced that ACS could afford a full takeover. To meet the regulator’s demands, ACS earlier this month got approval from its shareholders to issue new shares if needed.

Hochtief said it had taken note of BaFin’s decision and its management and supervisory boards will examine the offer once it is published on Wednesday.

“We recommend that our shareholders do not make a decision (on the offer) until we have published our reaction,” Hochtief Chief Executive Herbert Luetkestratkoetter said in a statement.

An ACS spokeswoman, meanwhile, told Reuters that the basic offer remains unchanged.


Since ACS in September first mentioned the possibility of launching a hostile takeover Hochtief had explored a number of options, including seeking a white knight.

German trade union IG Bau said it now sees few options left for Hochtief to fend off the ACS bid.

“The chances of Hochtief presenting a white knight seem rather limited (now). However, we would argue that the downside for Hochtief shares in the current environment is very limited,” Equinet analyst Ingbert Faust said in a note.

But analyst Marc Nettelbeck at DZ Bank said that he did not expect management to surrender just yet.

“There are some poison pills left, for example the convertible bond, even though we doubt that this will work.

“The only way to defend ACS is to expose the fundamental value of the company, which is significantly above the current share price,” he said.

($1=.7606 euros)

(Additional reporting by Matthias Inverardi; Editing by Greg Mahlich)

ACS gets German approval for Hochtief bid